The Financial Services and Markets Bill has been introduced to Parliament on 20 July 2022. It was introduced to Parliament before the summer recess. The bill is designed to rescind EU law and create an authorisation and supervision regime under the FCA. iux markets It also contains provisions relating to senior managers and stablecoins.
Revocation of retained EU law
The Revocation of Retained EU Law in the Financial Services and Markets Bill is a key part of the Bill's broader reforms. It will revoke a range of EU legislation and its UK subordinate legislation relating to financial services and markets. This legislation covers a range of topics including market data, commodity derivatives, trading venues, and systematic internalisers.
The Bill also aims to protect the interests of financial institutions in the UK, by ensuring that they comply with the requirements of EU law. The UK government understands that the process will take years to complete, so it has included powers to make targeted modifications to the law to protect the stability of the UK financial system. In addition, the bill also aims to replace many of the EU regulations with UK-based legislation and rulebooks.
The bill also aims to give financial regulators more responsibility for setting UK financial services rules. In addition to this, it introduces a controversial secondary objective, namely the framework for revoking retained EU law. Once passed, the Financial Services and Markets Bill will replace retained EU law with new UK rules. It is expected to pass through the House of Commons in early 2023. Some of its key provisions include revocation of retained EU law, regulation of critical third parties, financial promotions, derivatives, and sustainability-related disclosures.
In addition to revocation of retained EU law, the bill also includes section 8 which grants additional powers to regulators. This will allow for more regulation of financial promotions and stablecoins.
Establishment of FCA authorisation and supervision regime
The Establishment of the FCA authorisation and supervision regime will change the way that the FCA regulates firms in the financial services market. The FCA will have a stronger focus on senior management and will be able to act quicker to solve problems. It will be responsible for overseeing all firms, including those which are PRA-authorised and passporting into the UK.
The new regime will be based on the current SUP, but will introduce additional requirements in the APER. It will allow both regulators to specify functions that have significant influence, also known as "customer dealing functions". The FCA will have the power to specify which functions involve customers, and it must consult the PRA before specifying the functions.
The new regime will be applied to firms who engage in retail and wholesale activities. The new rules are set to apply to these ARs, but more fundamental changes may be in the pipeline. In the meantime, the existing AR regime provides a temporary route to FCA authorisation. There are some differences between the proposed rules and the existing regime, but the new regime should be much more straightforward and transparent.
The Government proposes to give the FCA powers to publicly disclose warning notices, but this is met with opposition from firms. The committee notes that it is unclear whether this is a reasonable way to protect consumers. Furthermore, firms do not want their warning notices published before they have had a chance to respond.
The FCA and PRA will be closely coordinated. In particular, FCA and PRA will work closely together in the with-profits insurance industry. In addition, the FCA and PRA will support each other in representing the interests of the UK. The two regulators will also represent the interests of UK firms in EIOPA, which deals with conduct issues.
Provisions relating to stablecoins
The provisions of the financial services and markets bill (FSMB) on stablecoins aim to improve the regulation of these digital assets. They will enable regulators to set up a framework that will ensure that these digital currencies are safe and secure. In addition, the bill will give FMI firms the freedom to experiment with new payment methods in a temporary pilot scheme.
The House Financial Services Committee is expected to delay the markup of the bipartisan stablecoin bill for several months because of the ongoing controversy surrounding the cryptocurrency. As a result, Treasury Secretary Janet Yellen has been pushing for changes in a key provision of the bill. This delay will push back the timeline for the final bill until after the August recess. It also shows the ongoing struggle in Washington to establish new rules for digital asset marketplaces, following the collapse of several multibillion-dollar crypto startups.
The financial services and markets bill also includes provisions that aim to retain UK supremacy in the post-Brexit financial world. It also extends existing financial regulations to cover stablecoins. The new rules are expected to set standards for using them as payment, rules for promoting them, and investor protections.
As the government seeks to introduce a new crypto-asset regulatory regime in the UK, Chancellor Nadhim Zahawi has outlined his intentions to regulate stablecoins. He explained that the introduction of stablecoins as a form of payment in the UK was always intended. But the recent market meltdown and walkout of pro-crypto government members could have affected its inclusion.
In January 2021, the UK government issued a consultation and call for evidence to better understand the risks posed by stablecoins to consumers, financial stability, and innovation. The government hopes the new regulation will make stablecoins more widely accepted in the UK and strengthen the UK's role as a leader in the crypto space.
Provisions relating to senior managers
The Financial Services and Markets Bill is an important piece of legislation for the financial services industry, having been introduced to Parliament on 20 July 2022. As the largest piece of financial services legislation in nearly two decades, the Bill covers a wide range of issues. While there are some surprises in the Bill, many of the proposed changes were already widely anticipated.
The Financial Services and Markets Bill will amend the Financial Services and Markets Act 2000 and the Financial Services and Markets Act 2012. The Bill is expected to pass through Parliament in early 2023, and contains provisions affecting a range of areas, including the revocation of EU laws, cross-border payments, derivatives, financial promotions regime, and sustainable payment systems.
The Financial Markets Authority will implement a new SM&CR, similar to that implemented for banks and insurers. This includes a Certification Regime and conduct rules for all employees. In the future, this regime will also apply to Credit Rating Agencies and Recognised Investment Exchanges.
Impact on payments sector
As the global economy becomes more cashless, the payments industry is undergoing transformation. While cash is still a vital part of many countries' economies, the industry is supporting the development of digital economies and driving innovation. As more consumers shift to digital wallets, the need for a robust payments infrastructure increases.
This bill aims to improve the regulatory environment in the payments sector and create new opportunities. It also includes some significant measures to protect consumers and make it easier to access cash at ATMs. The bill also makes it easier for FMI firms to experiment with new technologies in temporary pilot schemes.
The bill includes amendments to the Financial Services and Markets Act 2000 and the Financial Services and Markets Act 2012. It is expected to complete its Parliamentary stages by early 2023. The bill contains provisions for the regulation of cross-border payments, derivatives, e-money, and financial market infrastructure.
As the bill is set to become law, the payments sector must prepare for the changes it brings. The new legislation aims to create a coherent, internationally respected regulatory regime. It also aims to protect consumers from fraud, while also making it easier for the Payment Systems Regulator to compensate victims of Authorised Push Payment fraud.